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8-K - FORM 8-K - PACIFIC CONTINENTAL CORPd524920d8k.htm

Exhibit 99.1

NEWS RELEASE

 

FOR MORE INFORMATION CONTACT:                Hal Brown    Mick Reynolds
   CEO    Executive Vice President/CFO
   541 686-8685    541 686-8685
   http://www.therightbank.com   
   Email: banking@therightbank.com   

FOR IMMEDIATE RELEASE

Pacific Continental Corporation Reports First Quarter 2013 Results

Loan Growth and Successful Acquisition Drive First Quarter 2013 Profitability

EUGENE, Ore., April 24, 2013 – Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the first quarter 2013.

Recent highlights:

 

   

Completed acquisition of Century Bank and successfully converted systems following quarter end.

 

   

Net income of $2.5 million, which includes $1.2 million of pre-tax merger related expense.

 

   

Organic loan growth continued for fifth consecutive quarter.

 

   

Second quarter 2013 quarterly cash dividend increased to $0.09 per share and special cash dividend of $0.05 per share declared.

 

   

Announced reinstatement of stock repurchase plan.

 

   

Total risk-based capital ratio of 16.62%, significantly above the 10.0% minimum for “well-capitalized” designation.

 

   

Recognized by Oregon Business magazine as one of the 100 Best Companies to Work for in Oregon, marking it the fourteenth consecutive year Pacific Continental was named as a 100-best company.

Century Bank acquisition

The Century Bank acquisition successfully closed on February 1, 2013. A summary of the assets and liabilities acquired through the transaction is provided in the financial tables accompanying this press release. System integration was successfully completed during the weekend of April 6, 2013.

Net income

Net income for first quarter 2013 was $2.5 million or $0.14 per diluted share compared to net income of $2.7 million or $0.15 per diluted share in first quarter 2012. Merger expenses related to the acquisition of Century Bank totaled $1.2 million in the first quarter and reduced net income by approximately $835 thousand or $0.05 per diluted share.

“Our first quarter results and completed acquisition of Century Bank demonstrate continued progress towards our strategic initiatives,” said Hal Brown, chief executive officer. “In addition to the Century Bank transaction, we enjoyed our fifth consecutive quarter of organic loan growth which resulted in margin expansion. These results and our future performance outlook support the board’s decision to once again increase the quarterly dividend,” added Brown.


Loan activity continues

Outstanding gross loans at March 31, 2013, were $950.8 million, up $79.5 million from year-end 2012. Of the $63.3 loans acquired from Century Bank on February 1, 2013, $62.6 million was outstanding at quarter end. The remaining $16.9 million of loan growth was attributable to organic growth experienced during the quarter and represents an annualized growth rate of 7.8%. The bank continues to expand its lending to health care professionals. At March 31, 2013, loans to dental practitioners totaled $280.0 million and represented 29.4% of the total loan portfolio, a growth rate of 3.4% during the first quarter and 25.6% over March 31, 2012. Out-of-market dental loans at December 31, 2012, were $90.2 million, up $11.3 million during the quarter and up $40.2 million over March 31, 2012.

“Our business model and focused strategy continue to achieve excellent results,” said Roger Busse, president and chief operating officer. “We are increasingly optimistic based on our strengthening pipelines in all markets that organic growth will continue throughout 2013,” added Busse.

Capital levels

In February 2013, the Company’s board of directors authorized a stock repurchase plan. The plan is authorized to repurchase up to 892,000 shares or five percent of the Company’s outstanding shares. The plan commenced on April 1, 2013 with the purchases to occur over the next 12 months. No shares were repurchased during the first quarter.

The Company’s capital ratios continue to be well above the minimum FDIC well-capitalized designated levels. At March 31, 2013, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratios were 11.71%, 15.38% and 16.62%, respectively, as compared to 12.33%, 16.90% and 18.15% at December 31, 2012. The FDIC’s minimum well-capitalized designation ratios are 5.00%, 6.00% and 10.00%, respectively.

Classified assets, provisioning and loan statistics

Classified assets saw a small increase during first quarter 2013, which was primarily attributable to assets acquired in the Century Bank transaction. At March 31, 2013, classified assets totaled $58.4 million, an increase of $2.3 million from the end of the prior quarter. Classified assets acquired through the Century Bank acquisition, net of the fair value adjustment, totaled $5.8 million at quarter end.

Nonperforming assets, a subcategory of classified assets, totaled $24.7 million at March 31, 2013, or 1.71% of total assets, a decrease from December 31, 2012, and March 31, 2012, ratios of 1.92% and 2.72%, respectively. Nonperforming assets were comprised of $7.0 million of nonperforming loans, net of government guarantees, and $17.7 million in other real estate owned.

Loans past-due 30-89 days were 0.20% of total loans at March 31, 2013, compared to 0.30% at December 31, 2012. This is the fifteenth consecutive quarter in which this ratio was near or below one percent, a figure that suggests stabilization in the migration of problem loans.

“With the Century Bank acquisition and system conversion behind us, our expectation is that we will see further reductions in the level of classified and problem assets throughout 2013,” said Casey Hogan, executive vice president and chief credit officer. “This improvement should allow more resources for business development and growth initiatives as the year progresses,” added Hogan.

The Company’s first quarter 2013 provision for loan losses totaled $250 thousand compared to $1.3 million for first quarter 2012. The lower provision for loan losses reflects improving credit quality. During the first quarter 2013, net loan charge offs totaled $283 thousand compared to $62 thousand of net recoveries in fourth quarter 2012 and $412 thousand in net loan charge offs in first quarter 2012.


The allowance for loan losses as a percentage of outstanding loans at March 31, 2013, was 1.72% compared to 1.88% at December 31, 2012, and 1.92% at March 31, 2012. The decrease was partially attributable to the Century Bank acquired loans included at their fair value, net of any credit risk adjustments.

Core deposit growth slows

Period-end Company-defined core deposits at March 31, 2013, were $960.7 million and included $64.8 million of deposits acquired in the Century Bank transaction. Organically, outstanding core deposits declined during the first quarter 2013, which is a typical seasonal pattern for the first quarter. Average core deposits for the first quarter 2013 were $943.3 million compared to $900.4 million and $870.1 million at December 31, 2012, and March 31, 2012, respectively, with the increase primarily attributable to the acquisition of Century Bank core deposits. At period-end March 31, 2013, noninterest-bearing demand deposits totaled $314.8 million and represent 32.8% of core deposits.

Net interest margin

The first quarter 2013 net interest margin averaged 4.29%, a linked-quarter increase of 18 basis points over fourth quarter 2012, and a decline of 10 basis points from first quarter 2012. The increase in the linked-quarter net interest margin was attributable to three factors: 1) accretion of the Century Bank loan fair value mark which totaled $231 thousand; 2) reduction in the amortization of premiums on mortgage-backed securities due to lower levels of refinancing activity; and 3) improvement in asset mix as average loans increased to 65 percent of total average assets. The accretion of the Century Bank loan fair value mark during the first quarter 2013 positively impacted the net interest margin by 7 basis points. Consistent with previous quarter trends, the yield on loans and the cost of funds both continued to decline on a linked-quarter basis.

Noninterest income and expense

First quarter noninterest income was $1.3 million, down $172 thousand from first quarter 2012. The decline was primarily due to a drop in revenues from the origination of residential mortgages as this line of business was closed at the end of first quarter 2012. During the first quarter 2013, the Company also booked other-than-temporary-impairment expense of $16 thousand related to its holdings of private-label mortgage-backed securities.

Noninterest expense in first quarter 2013 was up $1.8 million and $2.1 million over fourth quarter 2012 and first quarter 2012, respectively. The majority of the increase in noininterest expense on a linked-quarter and year-over year basis was due to $1.2 million of merger related expenses in the Century Bank acquisition recorded during first quarter 2013. The Company also saw an increase in personnel expenses of $566 thousand, which was due to 2012 staff additions and personnel added in the Century Bank acquisition.

The first quarter efficiency ratio was 73.5%. Excluding first quarter merger related expenses, the efficiency ratio would have been 65.0%.

Conference call and audio webcast:

Management will conduct a live conference call and audio webcast for interested parties relating to the Company’s results for the first quarter 2013 on Thursday, April 25, 2013, at 11:00 a.m. Pacific / 2:00 p.m. Eastern. To listen to the conference call, interested parties should call (866) 292-1418. Following the formal remarks, a question and answer session will be open to all interested parties. The webcast will be available via Pacific Continental’s website http://www.therightbank.com To listen to the live audio webcast, click on the webcast presentation link on the Company’s home page a few minutes before the presentation is scheduled to begin. An audio webcast replay is typically available within twenty-four hours following the live webcast and will be archived for one year on the Pacific Continental website. Any questions regarding the conference call presentation or webcast should be directed to Maecey Castle, vice president and director of corporate communications, at (541) 686-8685.


About Pacific Continental Bank

Pacific Continental Bank, the operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fourteen banking offices in Oregon and Washington. The Bank also operates a loan production office in Tacoma, Washington. Pacific Continental, with $1.4 billion in assets, has established one of the most unique and attractive metropolitan branch networks in the Pacific Northwest with offices in three of the region’s largest markets including Seattle, Portland and Eugene. Pacific Continental targets the banking needs of community-based businesses, health care professionals, professional service providers and nonprofit organizations.

Since its founding in 1972, Pacific Continental Bank has been honored with numerous awards and recognitions from highly regarded third-party organizations including The Seattle Times, the Portland Business Journal, the Seattle Business magazine and Oregon Business magazine. A complete list of the company’s awards and recognitions – as well as supplementary information about Pacific Continental Bank – can be found online at www.therightbank.com. Pacific Continental Corporation’s shares are listed on the Nasdaq Global Select Market under the symbol “PCBK” and are a component of the Russell 2000 Index.

Forward-Looking Statement Safe Harbor

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “goals,” “believes” “anticipates” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could.” The forward-looking statements made represent Pacific Continental’s current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan and deposit growth, capital strategy, future problem asset migration and credit quality trends generally. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Pacific Continental’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those more fully discussed under “Risk Factors”, “Business”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Pacific Continental’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in any of Pacific Continental’s subsequent SEC filings, including the high concentration of loans of the Company’s banking subsidiary in commercial and residential real estate lending and our significant concentration in loans to dental professionals; adverse economic trends in the United States and the markets we serve affecting the Bank’s borrower base; a continued decline in the housing and real estate market; a continued increase in unemployment or sustained high levels of unemployment; continued erosion or sustained low levels of consumer confidence; changes in the Federal Reserve’s monetary policies and the regulatory environment and increases in associated costs, particularly ongoing compliance expenses and resource allocation needs; vendor quality and efficiency; the Company’s ability to control risks associated with rapidly changing technology both from an internal perspective as well as for external providers operational systems or infrastructure failures; increased competition; fluctuating interest rates; a tightening of available credit; and risks related to acquisitions, including integration, retention of key personnel and business, anticipated cost savings and results and performance of the acquired company or the combined entity. Pacific Continental Corporation undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking PSLRA’s safe harbor provisions.


PACIFIC CONTINENTAL CORPORATION

Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three months ended  
     March 31,
2013
    March 31,
2012
 
    

Interest and dividend income

    

Loans

   $ 12,699      $ 12,122   

Securities

     1,904        2,144   

Federal funds sold & interest-bearing deposits with banks

     3        1   
  

 

 

   

 

 

 
     14,606        14,267   
  

 

 

   

 

 

 

Interest expense

    

Deposits

     885        1,139   

Federal Home Loan Bank & Federal Reserve borrowings

     308        469   

Junior subordinated debentures

     34        40   

Federal funds purchased

     4        6   
  

 

 

   

 

 

 
     1,231        1,654   
  

 

 

   

 

 

 

Net interest income

     13,375        12,613   

Provision for loan losses

     250        1,300   
  

 

 

   

 

 

 

Net interest income after provision for loan losses

     13,125        11,313   
  

 

 

   

 

 

 

Noninterest income

    

Service charges on deposit accounts

     460        440   

Other fee income, principally bankcard

     372        387   

Loan servicing fees

     17        18   

Mortgage banking income

     —          72   

Bank-owned life insurance income

     126        127   

Loss on sale of investment securities

     (8     —     

Impairment losses on investment securities (OTTI)

     (16     —     

Other noninterest income

     329        408   
  

 

 

   

 

 

 
     1,280        1,452   
  

 

 

   

 

 

 

Noninterest expense

    

Salaries and employee benefits

     5,479        4,913   

Premises and equipment

     890        863   

Bankcard processing

     126        141   

Business development

     495        423   

FDIC insurance assessment

     221        239   

Other real estate expense

     424        378   

Merger Related Expenses (1)

     1,246        —     

Other noninterest expense

     1,889        1,762   
  

 

 

   

 

 

 
     10,770        8,719   
  

 

 

   

 

 

 

Income before provision for income taxes

     3,635        4,046   

Provision for income taxes

     1,185        1,330   
  

 

 

   

 

 

 

Net income

   $ 2,450      $ 2,716   
  

 

 

   

 

 

 

Earnings per share:

    

Basic

   $ 0.14      $ 0.15   
  

 

 

   

 

 

 

Diluted

   $ 0.14      $ 0.15   
  

 

 

   

 

 

 

Weighted average shares outstanding:

    

Basic

     17,835,088        18,376,324   

Common stock equivalents attributable to stock-based awards

     151,431        141,996   
  

 

 

   

 

 

 

Diluted

     17,986,519        18,518,320   
  

 

 

   

 

 

 

PERFORMANCE RATIOS

    

Return on average assets

     0.70     0.85

Return on average equity (book)

     5.43     6.07

Return on average equity (tangible) (2)

     6.21     6.93

Net interest margin (3)

     4.29     4.39

Efficiency ratio (4)

     73.49     61.99

 

(1) 

Represents expenses associated with the acquisition of Century Bank

(2) 

Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

(3) 

Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate.

(4) 

Efficiency ratio is noninterest expense divided by operating revenues. Operating revenues are net interest income plus noninterest income.


PACIFIC CONTINENTAL CORPORATION

Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)

 

     March 31,
2013
    December 31,
2012
    March 31,
2012
 
      

ASSETS

      

Cash and due from banks

   $ 25,671      $ 28,607      $ 18,187   

Interest-bearing deposits with banks

     390        94        207   
  

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents

     26,061        28,701        18,394   

Securities available-for-sale

     379,766        389,885        366,916   

Loans, less allowance for loan losses and net deferred fees

     933,771        854,071        809,031   

Interest receivable

     5,085        4,520        4,560   

Federal Home Loan Bank stock

     10,718        10,462        10,652   

Property and equipment, net of accumulated depreciation

     19,245        19,238        19,950   

Goodwill and intangible assets

     23,770        22,031        22,179   

Deferred tax asset

     7,015        6,230        6,648   

Taxes receivable

     —          —          1,671   

Other real estate owned

     17,772        17,972        10,102   

Prepaid FDIC assessment

     1,545        1,746        2,536   

Bank-owned life insurance

     15,747        15,621        15,165   

Other assets

     3,163        3,010        1,989   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,443,658      $ 1,373,487      $ 1,289,793   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

      

Deposits

      

Noninterest-bearing demand

   $ 314,798      $ 329,825      $ 281,282   

Savings and interest-bearing checking

     566,555        554,693        517,350   

Time $100,000 and over

     82,041        73,610        72,309   

Other time

     104,301        88,026        83,706   
  

 

 

   

 

 

   

 

 

 

Total deposits

     1,067,695        1,046,154        954,647   

Federal funds and overnight funds purchased

     4,450        11,570        —     

Federal Home Loan Bank borrowings

     178,000        118,000        143,500   

Junior subordinated debentures

     8,248        8,248        8,248   

Accrued interest and other payables

     2,807        6,134        3,838   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     1,261,200        1,190,106        1,110,233   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity

      

Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 17,835,088 at March 31, 2013 and at December 31, 2012 and 18,195,415 at March 31, 2012

     133,236        133,017        135,920   

Retained earnings

     44,129        44,533        39,267   

Accumulated other comprehensive income

     5,093        5,831        4,373   
  

 

 

   

 

 

   

 

 

 
     182,458        183,381        179,560   
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,443,658      $ 1,373,487      $ 1,289,793   
  

 

 

   

 

 

   

 

 

 

CAPITAL RATIOS

      

Total capital (to risk weighted assets)

     16.62     18.15     19.02

Tier I capital (to risk weighted assets)

     15.38     16.90     17.76

Tier I capital (to leverage assets)

     11.71     12.33     12.08

Tangible common equity (to tangible assets)(1)

     11.18     11.94     12.42

Tangible common equity (to risk-weighted assets)(1)

     15.10     16.67     17.36

OTHER FINANCIAL DATA

      

Shares outstanding at end of period

     17,835,088        17,835,088        18,195,415   

Tangible shareholders’ equity(1)

   $ 158,688      $ 161,350      $ 157,381   

Book value per share

   $ 10.23      $ 10.28      $ 9.87   

Tangible book value per share

   $ 8.90      $ 9.05      $ 8.65   

 

(1) 

Tangible shareholders’ equity excludes goodwill and core deposit intangible assets related to acquisitions.


PACIFIC CONTINENTAL CORPORATION

Loans by Type and Allowance for Loan Losses

(In thousands)

(Unaudited)

 

     March 31,
2013
    December 31,
2012
    March 31,
2012
 
      

LOANS BY TYPE

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ 43,805      $ 45,212      $ 51,102   

Residential 1-4 family

     54,615        51,437        59,642   

Owner-occupied commercial

     234,083        219,276        218,526   

Nonowner-occupied commercial

     164,725        145,315        140,142   
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

     497,228        461,240        469,412   

Construction loans:

      

Multifamily residential

     23,162        17,022        4,906   

Residential 1-4 family

     22,550        20,390        16,590   

Commercial real estate

     25,866        23,235        12,546   

Commercial bare land and acquisition & development

     10,874        10,668        18,566   

Residential bare land and acquisition & development

     9,000        8,405        11,016   
  

 

 

   

 

 

   

 

 

 

Total construction real estate loans

     91,452        79,720        63,624   

Total real estate loans

     588,680        540,960        533,036   

Commercial loans

     357,089        325,604        286,543   

Consumer loans

     4,020        3,581        4,569   

Other loans

     1,039        1,112        1,439   
  

 

 

   

 

 

   

 

 

 

Gross loans

     950,828        871,257        825,587   

Deferred loan origination fees

     (745     (841     (727
  

 

 

   

 

 

   

 

 

 
     950,083        870,416        824,860   

Allowance for loan losses

     (16,312     (16,345     (15,829
  

 

 

   

 

 

   

 

 

 
   $ 933,771      $ 854,071      $ 809,031   
  

 

 

   

 

 

   

 

 

 
     Three months ended  

ALLOWANCE FOR LOAN LOSSES

   March 31,
2013
    December 31,
2012
    March 31,
2012
 
      

Balance at beginning of period

   $ 16,345      $ 16,283      $ 14,941   

Provision for loan losses

     250        —          1,300   

Loan charge offs

     (597     (855     (522

Loan recoveries

     314        917        110   
  

 

 

   

 

 

   

 

 

 

Net charge offs

     (283     62        (412
  

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 16,312      $ 16,345      $ 15,829   
  

 

 

   

 

 

   

 

 

 


PACIFIC CONTINENTAL CORPORATION

Selected Other Financial Information and Ratios

(In thousands)

(Unaudited)

 

     Three months ended  
     March 31,
2013
    December 31,
2012
    March 31,
2012
 
      

BALANCE SHEET AVERAGES

      

Loans(1)

   $ 917,469      $ 846,199      $ 826,265   

Allowance for loan losses

     (16,388     (16,518     (15,427
  

 

 

   

 

 

   

 

 

 

Loans, net of allowance

     901,081        829,681        810,838   

Securities and short-term deposits

     387,312        401,537        360,940   
  

 

 

   

 

 

   

 

 

 

Earning assets

     1,288,393        1,231,218        1,171,778   

Noninterest-earning assets

     123,595        126,878        112,849   
  

 

 

   

 

 

   

 

 

 

Assets

   $ 1,411,988      $ 1,358,096      $ 1,284,627   
  

 

 

   

 

 

   

 

 

 

Interest-bearing core deposits(2)

   $ 636,138      $ 583,339      $ 586,154   

Noninterest-bearing core deposits(2)

     307,176        317,029        283,943   
  

 

 

   

 

 

   

 

 

 

Core deposits(2)

     943,314        900,368        870,097   

Noncore interest-bearing deposits

     110,939        103,851        78,781   
  

 

 

   

 

 

   

 

 

 

Deposits

     1,054,253        1,004,219        948,878   

Borrowings

     170,308        164,966        151,828   

Other noninterest-bearing liabilities

     4,413        5,281        4,037   
  

 

 

   

 

 

   

 

 

 

Liabilities

     1,228,974        1,174,466        1,104,743   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity (book)

     183,014        183,630        179,884   
  

 

 

   

 

 

   

 

 

 

Liabilities and equity

   $ 1,411,988      $ 1,358,096      $ 1,284,627   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity (tangible)(3)

   $ 159,879      $ 161,586      $ 157,675   
  

 

 

   

 

 

   

 

 

 

SELECTED MARKET DATA

      

Eugene market gross loans, period-end

   $ 324,009      $ 253,345      $ 237,687   

Portland market gross loans, period-end

     388,979        383,616        384,550   

Seattle market gross loans, period-end

     146,860        154,229        153,340   

Out-of-market health care gross loans, period-end

     90,980        80,067        50,010   
  

 

 

   

 

 

   

 

 

 

Total gross loans, period-end

   $ 950,828      $ 871,257      $ 825,587   
  

 

 

   

 

 

   

 

 

 

Eugene market core deposits, period-end(2)

   $ 598,156      $ 536,143      $ 502,710   

Portland market core deposits, period-end(2)

     232,431        258,516        235,571   

Seattle market core deposits, period-end(2)

     130,156        143,970        120,648   
  

 

 

   

 

 

   

 

 

 

Total core deposits, period-end(2)

     960,743        938,629        858,929   

Other deposits, period-end

     106,951        107,525        95,718   
  

 

 

   

 

 

   

 

 

 

Total

   $ 1,067,694      $ 1,046,154      $ 954,647   
  

 

 

   

 

 

   

 

 

 

Eugene market core deposits, average(2)

   $ 569,331      $ 518,487      $ 506,776   

Portland market core deposits, average(2)

     241,491        241,585        242,659   

Seattle market core deposits, average(2)

     132,493        140,296        120,662   
  

 

 

   

 

 

   

 

 

 

Total core deposits, average(2)

     943,315        900,368        870,097   

Other deposits, average

     110,938        103,851        78,781   
  

 

 

   

 

 

   

 

 

 

Total

   $ 1,054,253      $ 1,004,219      $ 948,878   
  

 

 

   

 

 

   

 

 

 

NET INTEREST MARGIN RECONCILIATION

      

Yield on average loans

     5.72     5.76     6.01

Yield on average securities(4)

     2.26     1.98     2.60
  

 

 

   

 

 

   

 

 

 

Yield on average earning assets(4)

     4.68     4.53     4.96

Rate on average interest-bearing core deposits

     0.36     0.41     0.53

Rate on average interest-bearing non-core deposits

     1.16     1.17     1.85
  

 

 

   

 

 

   

 

 

 

Rate on average interest-bearing deposits

     0.48     0.53     0.69

Rate on average borrowings

     0.82     0.88     1.36
  

 

 

   

 

 

   

 

 

 

Cost of interest-bearing funds

     0.54     0.59     0.81
  

 

 

   

 

 

   

 

 

 

Interest rate spread(4)

     4.14     3.94     4.15
  

 

 

   

 

 

   

 

 

 

Net interest margin(4)

     4.29     4.11     4.39
  

 

 

   

 

 

   

 

 

 

 

(1) 

Includes loans held-for sale.

(2) 

Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.

(3) 

Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

(4) 

Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $251 thousand, $250 thousand and $186 thousand for the three months ended March 31, 2013, December 31, 2012 and March 31, 2012, respectively


PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets and Asset Quality Ratios

(In thousands)

(Unaudited)

 

     March 31,
2013
    December 31,
2012
    March 31,
2012
 
      
NONPERFORMING ASSETS       

Non-accrual loans

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ —        $ —        $ —     

Residential 1-4 family

     1,269        1,140        3,344   

Owner-occupied commercial

     3,148        3,805        5,058   

Nonowner-occupied commercial

     —          —          —     
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

     4,417        4,945        8,402   

Construction loans:

      

Multi-family residential

     —          —          —     

Residential 1-4 family

     —          —          15   

Commercial real estate

     —          —          933   

Commercial bare land and acquisition & development

     —          —          8,491   

Residential bare land and acquisition & development

     101        101        1,791   
  

 

 

   

 

 

   

 

 

 

Total construction real estate loans

     101        101        11,230   
  

 

 

   

 

 

   

 

 

 

Total real estate loans

     4,518        5,046        19,632   

Commercial loans

     3,344        4,315        5,899   
  

 

 

   

 

 

   

 

 

 

Total nonaccrual loans

     7,862        9,361        25,531   

90-days past due and accruing interest

     —          —          —     

Total nonperforming loans

     7,862        9,361        25,531   
  

 

 

   

 

 

   

 

 

 

Nonperforming loans guaranteed by government

     (878     (905     (492

Net nonperforming loans

     6,984        8,456        25,039   
  

 

 

   

 

 

   

 

 

 

Other real estate owned

     17,772        17,972        10,102   
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets, net of guaranteed loans

   $ 24,756      $ 26,428      $ 35,141   
  

 

 

   

 

 

   

 

 

 
ASSET QUALITY RATIOS       

Allowance for loan losses as a percentage of total loans outstanding

     1.72     1.88     1.92

Allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees

     233.56     193.29     63.22

Quarter to date net loan charge offs (recoveries) as a percentage of average loans, annualized

     0.13     -0.03     0.20

Net nonperforming loans as a percentage of total loans

     0.74     0.97     3.04

Nonperforming assets as a percentage of total assets

     1.71     1.92     2.72

Consolidated classified asset ratio(1)

     32.83     31.18     38.44

Past due as a percentage of total loans (2)

     0.20     0.30     0.67

 

(1)

Classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by total consolidated Tier 1 capital plus the allowance for loan losses.

(2) 

Defined as loans past due more than 30 days and still accruing interest, as a percentage of total loans, net of deferred fees.


PACIFIC CONTINENTAL CORPORATION

Aged Analysis of Loans Receivable (Unaudited)

(In thousands)

As of March 31, 2013

 

     30-59 Days
Past Due
Still
Accruing
     60-89 Days
Past Due
Still
Accruing
     Greater
Than
90 Days
Still
Accruing
     Nonaccrual      Total Past
Due and
Nonaccrual
     Total
Current
     Total
Loans

Receivable
 
                    
                    
                    

Real estate loans

                    

Multi-family residential

   $ —         $  —         $ —         $ —         $ —         $ 43,805       $ 43,805   

Residential 1-4 family

     421         80         —           1,269         1,770         52,845         54,615   

Owner-occupied commercial

     —           —           —           3,148         3,148         230,935         234,083   

Nonowner-occupied commercial

     —           —           —           —           —           164,725         164,725   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     421         80         —           4,417         4,918         492,310         497,228   

Construction

                    

Multi-family residential

     —           —           —           —           —           23,162         23,162   

Residential 1-4 family

     234         —           —           —           234         22,316         22,550   

Commercial real estate

     —           —           —           —           —           25,866         25,866   

Commercial bare land and acquisition & development

     —           —           —           —           —           10,874         10,874   

Residential bare land and acquisition & development

     —           —           —           101         101         8,899         9,000   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     234         —           —           101         335         91,117         91,452   

Commercial and other

     1,118         38         —           3,344         4,500         353,628         358,128   

Consumer

     6         5         —           —           11         4,009         4,020   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Totals

   $ 1,779       $ 123       $  —         $ 7,862       $ 9,764       $ 941,064       $ 950,828   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

PACIFIC CONTINENTAL CORPORATION

Aged Analysis of Loans Receivable (Unaudited)

(In thousands)

As of March 31, 2012

 

     30-59 Days
Past Due
Still Accruing
     60-89 Days
Past Due
Still Accruing
     Greater
Than
90 Days
Still Accruing
     Nonaccrual      Total Past
Due and
Nonaccrual
     Total
Current
     Total
Financing

Receivables
 
                    
                    
                    

Real estate loans

                    

Multi-family residential

   $ —         $ —         $  —         $ —         $ —         $ 51,102       $ 51,102   

Residential 1-4 family

     635         243         —           3,344         4,222         55,420         59,642   

Owner-occupied commercial

     —           732         —           5,058         5,790         212,736         218,526   

Nonowner-occupied commercial

     96         —           —           —           96         140,046         140,142   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     731         975         —           8,402         10,108         459,304         469,412   

Construction

                    

Multi-family residential

     —           —           —           —           —           4,906         4,906   

Residential 1-4 family

     —           —           —           15         15         16,575         16,590   

Commercial real estate

     1,538         —           —           933         2,471         10,075         12,546   

Commercial bare land and acquisition & development

     —           —           —           8,491         8,491         10,075         18,566   

Residential bare land and acquisition & development

     —           —           —           1,791         1,791         9,225         11,016   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     1,538         —           —           11,230         12,768         50,856         63,624   

Commercial and other

     1,340         951         —           5,899         8,190         279,792         287,982   

Consumer

     6         9         —           —           15         4,554         4,569   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,615       $  1,935       $       $ 25,531       $ 31,081       $ 794,506       $ 825,587   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


PACIFIC CONTINENTAL CORPORATION

Credit Quality Indicators (Unaudited)

(In thousands)

As of March 31, 2013

 

     Loan Grade  
     Pass      Special
Mention
     Substandard      Doubtful      Totals  

Real estate loans

              

Multi-family residential

   $ 42,483       $  —         $ 1,322       $  —         $ 43,805   

Residential 1-4 family

     44,337         —           10,278         —           54,615   

Owner-occupied commercial

     224,212         —           9,871         —           234,083   

Nonowner-occupied commercial

     159,589         —           5,136         —           164,725   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     470,621         —           26,607         —           497,228   

Construction

              

Multi-family residential

     23,162         —           —           —           23,162   

Residential 1-4 family

     22,368         —           182         —           22,550   

Commercial real estate

     24,286         —           1,580         —           25,866   

Commercial bare land and acquisition & development

     10,682         —           192         —           10,874   

Residential bare land and acquisition & development

     5,585         —           3,415         —           9,000   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     86,083         —           5,369         —           91,452   

Commercial and other

     349,999         —           8,129         —           358,128   

Consumer

     3,964         —           56         —           4,020   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Totals

   $ 910,667       $ —         $ 40,161       $ —         $ 950,828   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

PACIFIC CONTINENTAL CORPORATION

Credit Quality Indicators (Unaudited)

(In thousands)

As of March 31, 2012

 

     Loan Grade  
     Pass      Special
Mention
     Substandard      Doubtful      Totals  

Real estate loans

              

Multi-family residential

   $ 49,762       $  —         $ 1,340       $ —         $ 51,102   

Residential 1-4 family

     49,583         —           10,059         —           59,642   

Owner-occupied commercial

     205,878         —           11,083         1,565         218,526   

Nonowner-occupied commercial

     137,782         —           2,360         —           140,142   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     443,005         —           24,842         1,565         469,412   

Construction

              

Multi-family residential

     4,906         —           —           —           4,906   

Residential 1-4 family

     13,356         —           3,234         —           16,590   

Commercial real estate

     8,742         —           3,804         —           12,546   

Commercial bare land and acquisition & development

     10,074         —           8,492         —           18,566   

Residential bare land and acquisition & development

     6,164         —           4,852         —           11,016   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     43,242         —           20,382         —           63,624   

Commercial and other

     277,913         —           9,993         76         287,982   

Consumer

     4,491         —           78         —           4,569   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Totals

   $ 768,651       $ —         $ 55,295       $  1,641       $ 825,587   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


PACIFIC CONTINENTAL CORPORATION

Summary of Century Bank Acquisition

(In thousands)

(Unaudited)

 

     Century  Bank
February 1, 2013
 
  

ASSETS ACQUIRED

  

Securities available-for-sale

   $ 61   

Loans

     63,339   

Interest receivable

     250   

Federal Home Loan Bank stock

     355   

Property and equipment

     70   

Goodwill

     915   

Core deposit intangible

     845   

Deferred tax asset

     633   

Other assets

     16   
  

 

 

 

Total assets acquired

   $ 66,484   
  

 

 

 

LIABILITIES ASSUMED

  

Deposits

   $ 63,211   

Payable to Pacific Continental Bank for cash paid to shareholders

     2,891   

Accrued interest and other payables

     382   
  

 

 

 

Total liabilities acquired

   $ 66,484